FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2001 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : SHANNONSIDE CO-OP LIMITED (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Pierce Worker Member: Mr O'Neill |
1. Pension expectations.
BACKGROUND:
2. The dispute concerns a disagreement between the Union and the Company which arose as a result of incorrect information which was forwarded to the employees by the pension administrators on their pension benefit statements. This appears to have arisen as a result of a misunderstanding as to what constitutes pensionable pay for pension purposes. The Company is a dairy powder manufacturer and employs 65 people at Ballaghadereen, Co. Roscommon. The Company is owned by Connacht Gold and Mid-West Co-Op, the principal dairy cooperatives in the Connacht counties and South Donegal.
A Labour Court hearing took place on the 20th of June, 2001, and the Court suggested that meetings take place between the workers and the pension providers. The meetings took place. The pension providers have changed since then and a new Company have been employed to provide the service to the Company pension scheme.
As the information was not clarified to the union's satisfaction the matter was referred to the Labour Court for further investigation. A Labour Court hearing took place in Galway on the 27th of March, 2002.
UNION'S ARGUMENTS:
3. 1. The Union maintains that pensionable pay should be based on full salary and wanted to know: -
When did they start to allow full salary as the amount of money which the pension would be based on?
When did they decide to allow shift as part of the salary to be used for pension purposes?
Why did they decide to desist from using full salary for the members in the laboratory?
Why did they decide to stop including shift pay for pension purposes?.
2. The Union believes that if the issue of what constitutes "pensionable pay" is resolved, they would be in a position to sit down with the Company and agree improvements to the scheme, to which there is no objection by the Company.
3. The Union asserted that the pension funds allowed for the scheme to provide for pension benefits to be paid at full salary for laboratory staff and for shift pay for the operators as outlined in the pension provider's letter .
4. The Union is seeking concession if not in full, then in part. As many members have 20 years service the Union would expect that the pension expectation created would be honoured for at least 10 of those years.
5. The Union is prepared to close the door on the past, it wants to build trust for the future for the good of the Company and the workers.
6. The Company has already agreed an application date of March, 2000, for the improvements, therefore, a realistic time-frame for the conclusion of negotiations is sought.
COMPANY'S ARGUMENTS:
4. 1. The Union have always been aware that pension calculations have been based on basic pay and not gross pay.
2. The scheme was upgraded in 1990 following detailed discussions with SIPTU, the local Union Committee and individual employees. Following further detailed and exhaustive discussions, a comprehensive explanatory booklet was distributed to all employees.
3. The Co-Op has consistently offered to enhance the scheme with the improvements negotiated at national level between ICOS and SIPTU. To date, this offer has not been taken up and the existing pension remains unchanged.
4. The Company offer ensures its scheme is better than the industry average guaranteeing, as it does, the 3% escalation clause, and yet costing the individual member 20% less than the ICOS scheme.
5. If changes needed to be made as a result of negotiations at national level, the Company would not be found wanting.
RECOMMENDATION:
The claim has been in procedures for some time. Difficulties arose over the interpretation of pension benefits following a Union claim in January, 1999, when the Union sought improvements to the pension scheme. It emerged that incorrect information was supplied to certain members of the pension scheme in their Statement of Benefits for the late 1980's and again in 1990. The Company maintains that this arose due to incorrect information being extracted from the "returned salary information" supplied to the pension administrators, who extracted the gross figures instead of basic pay. The Company maintain that pension benefits are based on basic pay and not gross pay. As a result of these errors, the Union maintains that the correct pension benefit expectation should be calculated on gross pay.
From the information supplied, the Court is satisfied that the correct interpretation of expected pension benefits should be based on basic pay as the scheme offered and signed by each individual employee on the 1st of March, 1989, stated:-
"I understand, that with effect from March 1st, 1989, the above plan will be improved, conditional upon a contribution from all employees at the rate of 5.5% of pensionable salary (i.e. annual basic salary less an amount equal to one and two thirds the single state retirement pension...."
Based on the information supplied to the Court, pension contributions are calculated on basic pay less 1.67 single persons social welfare, therefore, the Court is satisfied that the correct interpretation of the pension scheme is that pension benefits are based on basic pay as maintained by the Company. Committee members negotiating the revised scheme in 1988/89 included laboratory staff.
In response to the claim of January, 1999, the Company has made an offer of a choice between the improved terms dated July, 2000, or the ICOS scheme. The Court recommends that the Union should give consideration to this offer.
Every effort should be made to ensure that members with a potential of more than 30 years' service (as this is the maximum service under the scheme) should benefit from the benefits of the improved scheme as distinct from the earlier scheme.
Signed on behalf of the Labour Court
Caroline Jenkinson
11th June, 2002______________________
HMCD/CCDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Helena McDermott, Court Secretary.